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Low Down Payments for First-Time Home Buyers

First-time home buyers often fear that they will need to come up with a huge down payment, but there are many programs designed to help them, and they require little to no money down. The federal government allows for a one-time withdrawal of up to $10,000 from a retirement account with no penalty if the money is used for a first-time home purchase. While there are drawbacks to paying less than 20% down, the average down payment for a newly built home in 2019 was just 6%, according to Forbes.

With a VA loan you could pay 0% down; typical home loans require 10% or 20% down; some lenders require as little as 5%. Build a relationship with your mortgage broker, and they can help you sift through the various down payment programs available. First-time home buyers can especially benefit from the advice of an expert mortgage broker.

Enjoy the Home Buying Experience

Buying a first home is one of life’s big steps. Make the most of it by learning and enjoying the process. Picture where you’d like to live. Learn about prospective neighborhoods, their school systems, and the average home values. What would your commute be like? Are you close to restaurants and shops? Does the city plan any developments that might affect home prices? Educate yourself on the various home loan products too. Develop strong relationships with mortgage brokers and real estate agents, who can help you navigate the process.

3 Reasons to Use an Agent When Buying Your First Home

A real estate agent will not only help you find a great home but also keep you from buying the wrong one. An agent’s expertise helps in every aspect of buying a first home. Here are three excellent reasons why a first-time home buyer should use an agent.

  • Negotiation Skills. Real estate agents are in the business of negotiation. They will represent you in negotiating the home price as well as in any matters that come up after the inspection of the home and the closing.
  • Experience. Agents are local professionals, emphasis on local. A knowledgeable agent can tell you about neighborhoods and schools, and they are privy to the latest news in the real estate market, like hot listings.
  • Resources.- Real estate agents are connected. They can refer you to home inspectors, attorneys, appraisers, and mortgage brokers. You may be able to find better mortgage rates online, but it doesn't hurt to check into your real estate agent's network too.

5 Considerations When Buying Your First Home

What should you keep in mind when buying your first home?

  • Don’t Pay Too Much. Walking through nice new homes can leave first-time buyers giddy. Be firm with a real estate agent if you keep seeing homes you really can’t afford. Think of what you’re paying for rent and then add taxes and insurance—that’s what you can comfortably pay for a mortgage, no more
  • Be Flexible. Start looking in your preferred neighborhood, but don’t be afraid to branch out. A real estate agent can tip you off to rising neighborhoods you might not know about. Don’t forget factors like school districts and your commute. If houses in your preferred neighborhood are out of reach, what about a condo?
  • Discuss Loan Options. Your mortgage broker will help you determine how much you can afford each month, but if the figure seems high to you, say so. A broker can explain adjustable-rate mortgages, government-backed loans, and the interest-only variety, all of which can get you into a new home without huge mortgage payments.
  • Credit Building. Mortgages are great ways to improve your credit profile, and a broker can help you maximize the potential. Some programs reward you for paying a little extra when you can, for example. Also, once you have a history of making payments on time, your interest rate might be reduced.
  • The Loan Meets Your Long-Term Goals. Are you buying your “forever home” or a place to live for three to five years? Communicate your goals with the lender because one loan product is a better match for each type of buyer.

Refinancing Your First Home Mortgage Down the Road

First-time home buyers sometimes can’t get the best rates and terms, but once they have been in a home for a while and built up equity, they can refinance. Refinancing a mortgage is pretty easy, especially if you work with the same broker who helped you buy the home. The process requires an application, a home appraisal, and many of the same documents you provided when you bought the home, but it all goes much faster.